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  4. Divorce: Division of Assets

Divorce Series - Division of Assets

Divorce Series - Division of Assets

Moving on from divorce often begins with adopting a constructive mindset. It may be an emotionally charged and difficult task to divide property accumulated throughout years of marriage. It is, however, necessary. Divorcing couples will certainly find it in their best interest to work cooperatively in order to streamline and optimize how they split their assets. When spouses strive to reach an agreement without needing legal intervention, they improve their bottom line. They can maximize what they each retain. They can also save time and sometimes the heartache and financial costs that may come with contesting decisions through the courts. Spouses may have a better chance at an amicable and fair settlement by first understanding some of the legal parameters.

Through the use of property division agreements, 90% of divorcing couples today are able to settle out of court (according to Legal Zoom). Doing so helps expedite the process. Where assets get complex, though, it may be wise to consult with a divorce financial planner. And surely, some states vary in detail on how they define certain terms.

"Separate Property": All states recognize "separate" property, or anything acquired prior to the marriage. Typically, spouses retain these assets after the divorce. Beyond real estate or other items, this can also include things like: any gifts by a 3rd party; an inheritance, received either before or after the marriage; or, any payments from a personal injury judgment. Of note, some separate property may lose its status if it is commingled with marital property (Forbes.com). For instance, if a separately owned home was improved upon during the marriage, it may become a joint asset. Similarly, if separately owned property increases in value during the marriage, that measurable increase can also be considered marital property.

"Community" and Other Special Property: Essentially, this is all income and assets acquired by either spouse during the marriage, regardless of who had ownership. This can include, but is not limited to, things like: real estate and land; all vehicles, including those for recreation; bank accounts, securities, tax refunds, and retirement plans; insurance policies; county club memberships; and even household items like furniture.

Some marital assets aren't so easily measured and will require special consideration. Again, the advice of an expert planner may be beneficial in weighing out these items' "worth." Assets difficult to divide might include tangible things like: pets; collections that appreciate, like artwork, antiques, sports memorabilia, and even keepsakes. Intangible marital assets may also require special consideration. Intellectual property, for instance, may be hard to measure. Any patents, copyrights, or trademarks registered during the marriage, and any lucrative future royalties may also prove difficult to divvy up.

50/50 vs. Equitable Distribution: The nine "community property" states automatically presume joint ownership of all assets except gifts or an inheritance. The community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. The 50/50 provision seeks to equally divide assets, either by individual item or by value. The other 41 states have "equitable distribution," wherein the focus is on a fair division of assets between spouses, which may not necessarily hold an equal monetary value. In these states, a judge may even award a spouse a monetary percentage of the total value of an item. In determining this, a judge may consider factors like: the length of the marriage; spouses' ages, physical condition, and emotional health; the financial situation of each spouse at the time of divorce; their respective earning potential; the standard of living attained during the marriage; any support or contributions made to a spouse's advanced schooling; and more. A judge may also order a spouse to contribute separate property to help make a split more equitable.

Bottom Line: Having open and thoughtful communication and disclosing all assets accurately will help divorcing couples begin the sensitive work of dividing their marital property. It is practical for a couple to make a detailed inventory of joint assets and to understand the monetary worth and even sentimental value of each item. Wherever appropriate, it is wise to do any research necessary to understand the short and long term consequences of any actions. Making decisions respectfully and cooperatively from a financial perspective, instead of an emotional one, will help lessen the chances for conflict. Additionally, a professional financial planner may review the terms of the agreement to help ensure a fair division of property.

Divorce Series: Division of Assets | Child Support & Custody | Prenups | Life After Divorce

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Disclaimer: This information is made available by MyLLC.com, Inc. (the "Company"), and is intended for educational purposes only, and it is not legal or tax advice. No action should be taken in reliance on any information in or on this site without verification with legal or tax counsel, after review of the facts and current law, that the action to be taken is appropriate under the circumstance. Except as expressly provided to the contrary in writing by the Company, the materials contained on this site are provided on an "as-is" basis without warranties of any kind, either express or implied. Company disclaims all other warranties, express or implied, including, without limitation, implied warranties of merchantability, fitness for a particular purpose, title and non-infringement as to the information, content and materials on and in the site. Company does not represent or warrant that materials on and in the site are accurate, complete, reliable, current or error-free.
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Nevada's Tax Laws have changed
Effective July 1st, 2015:
Be aware that if you are currently incorporated in the state of Nevada, or are considering becoming incorporated in Nevada, 2015 changes to the tax laws may directly affect and increase the costs to your business!

What is your first step? Simply choose which of the following two options applies to your business:

ALREADY INCORPORATED in the state of Nevada? 2015/08/15 - Your annual fees increased from $325 to $650, and that’s not including the Commerce Tax if it applies to your business! Further, you will now be required to file your tax return with the NV Department of Taxation with June 30th as the fiscal year, not the calendar year! Review these changes with your tax advisor immediately! If you choose to re-domicile your corporation in another state, MyLLC will file the re-domestication paperwork for you!

TRYING TO DECIDE WHICH STATE is best to incorporate your new business? MyLLC strives to provide you with up-to-date information and exceptional customer service. Contact your tax advisor to review your options and then talk to MyLLC's Incorporation Professionals to assist you in filing your articles of incorporation as well as provide you with Registered Agent services!

MyLLC is committed to assisting you in this process but you must contact us today!

Call us toll free at 888.88.MYLLC or fill out the contact form so one of our experts can help you.
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